BLOG MEANT FOR 25 JUNE 2018 MONDAY
Dear friends,
Nifty was weak early morning on Friday but somehow managed to rally towards the second half and finally closed 82 points higher at 10822. US markets closed slightly lower on Friday.
Since its the start of a new week, we have to see how Asian markets open on Monday morning. Markets are likely to be volatile since this is the last week of the month and Futures & Options contracts expire and hence traders will be trading to adjust their positions.
Nifty is in HOLD zone for short term.
The indications for individual stocks for short term only are –
DON’T BUY ZONE – VEDANTA, ITC, TITAN, ASIAN PAINT, HINDALCO,
HOLD ZONE –MARUTI, RELIANCE INDUSTRIES, TCS, INFOSYS, HDFC BANK, SBI, M&M, HDFC
WAIT TO BUY ZONE – AXIS BANK, YES BANK
All the fluctuations in short term should not affect the long term investors who invest regularly every month.
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Question from a Participant of our Workshop –
“Should we buy companies just because they are giving bonus issue or doing buyback of shares etc?
Answer –
This is a good question since many people may be confused on what to do about bonus issue or buybacks etc.
We must buy shares of companies only if they are fundamentally strong and their business is improving over the years. Just because some company is giving a bonus, we need not buy it since if it is not worth buying normally, bonus should not affect your decision.
Similarly, when a company announces a buyback, they will not buyback all the shares you have. For example, if you hold 100 shares of a company which is going to buyback its own shares, it may actually buy only around 40-50-60 shares from you and the rest you will need to hold or sell it in the market at market price.
So, if you buy the 100 shares of the company, you will unnecessarily need to hold some quantity of shares because does not buy back all shares.
If you already hold some companies whose shares are being bought back, then you will need to decide whether the company has good potential for the future. If you think its a good company, based on its track record, then you can continue to hold the shares and there is compulsion to sell it back to the company.
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All the best!
Dr.Bharath Chandra and Rohan
